Credit and Prepaid Card News
The latest news on the credit card and prepaid card industry from the Center for Responsible Lending.
- Credit-Card Application Rules Eased
Wall Street Journal 11 Nov 2013
The Consumer Financial Protection Bureau (CFPB) on Nov. 4 removed a provision, established under the Credit Card Accountability Responsibility and Disclosure Act, that had blocked many people with no individual income from applying for credit. The restriction was intended to keep young adults out of credit card debt, but the CFPB says it inadvertently led to "otherwise creditworthy" applicants being turned away.
- Card Act Cleared Up Credit Cards’ Hidden Costs
New York Times 08 Nov 2013
The 2009 Credit Card Accountability Responsibility and Disclosure Act, better known as the Card Act, was intended to force down the hidden fees that card issuers collect from customers. Researchers led by University of Chicago economist Neale Mahoney found that the law worked as intended, reducing the costs of credit cards -- especially for borrowers with flawed credit -- with no signs of higher interest charges or reduced access to credit.
- Is 18 Too Young for Credit Cards?
MarketWatch 08 Nov 2013
A new study on the credit card behavior of young adults suggests that a provision in the Credit Card Accountability, Responsibility and Disclosure Act of 2009 -- intended to keep many people under 21 years of age from getting a credit card -- was misguided and unnecessary.
- CARD Act Disclosures May Have Little Sway Over Consumers
American Banker 01 Nov 2013
Although the 2009 CARD Act promised clearer disclosures to consumers, such as suggested payment amounts for a card balance and toll-free phone numbers for credit counseling, analysts are questioning whether those requirements have driven borrowers to handle their accounts more responsibly. A September report by several economists calculated that the share of borrowers on track to pay off their balance in 36 months rose by only 0.5 percentage points since the law took effect.
- Credit Bureaus Taking Closer Look at How You Use Your Credit Card
Pittsburgh Post-Gazette 31 Oct 2013
The big three credit bureaus -- TransUnion, Experian, and Equifax -- are putting new information in credit profiles that could help credit card issuers flag low-risk customers. The data will indicate whether a borrower is a "revolver" who carries a balance into each month and incurs interest or a "transactor" who tends to pay off purchase costs in full before the next billing cycle.
- Deferred-Interest Loans Face New Scrutiny
American Banker 23 Oct 2013
The Consumer Financial Protection Bureau (CFPB) is raising concerns about deferred-interest credit card loans offered by retailers. These accounts often waive interest on all purchases during an introductory period but then hit borrowers with stiff costs later.
- 5 Ways to Deter Credit Card Fraud
CBS MoneyWatch 15 Oct 2013
Credit-scoring giant FICO reports that credit card fraud is on a rapid rise, especially cases where stolen data is used to make purchases online or by phone. Most banks do not hold customers responsible for a fraudulent charge that is reported on time, but consumers can still take a few steps to protect themselves.
- Small Business Credit Cards May Lack Consumer Protections
Time 14 Oct 2013
The Credit Card Accountability Responsibility and Disclosure Act of 2009 was meant to protect consumers from unexpectedly higher rates and unwarranted penalty fees. The law does not, however, cover business credit cards.
- Credit Default Rates Increase Nationally
National Mortgage Professional 14 Oct 2013
According to the S&P/Experian Consumer Credit Default Indices, national default rates rose in September. The national composite edged up from 1.34 percent in August to 1.38 percent. Default rates were 1.28 percent for first mortgages, up from 1.23 percent; 0.69 percent for second mortgages, up from 0.57 percent; 1.15 percent for auto loans, up from 1.11 percent; and 3.14 percent for bank cards, up from 3.12 percent.
- Young Credit Card Holders Are Less Likely to Default
Bloomberg 08 Oct 2013
Although Congress passed the CARD Act in 2009 to help prevent consumers under age 21 from digging themselves deep into credit card debt, a new study by researchers at Arizona State University and the Federal Reserve Bank of Richmond suggests that younger credit card users are not more likely to default. Consumers in this age group, rather, are working to build a credit history.
- Study: Debit Swipe Fee Reform Saves Consumers, Merchants Billions
Bank Credit News 04 Oct 2013
Reform of debit-card swipe fees helped save U.S. merchants and consumers billions of dollars in 2012, according to a report released by the Merchant Payments Coalition (MPC). This was one of the objectives when Congress passed the law in 2010.
- New Tactics Keep College Kids Hooked on Plastic
CNBC News 04 Oct 2013
Since passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, use of credit cards among college students has declined. Debit cards, however, are becoming more common and now are used by nearly 80 percent of students, a survey by Sallie Mae and Ipsos found. Many student ID cards double as debit cards, and prepaid cards are gaining popularity among parents who want to better control their kids' spending. The problem with prepaid and debit cards is that they do not allow students to build a credit record, and they often come with fewer marketing restrictions.
- CFPB Should Take Tougher Stance Against Credit Cards, Consumer Groups Say
American Banker 03 Oct 2013
Consumer advocates have asked that the Consumer Financial Protection Bureau (CFPB) take an even harder line with credit card issuers. At a field hearing in Chicago after the watchdog released its study on the impact of card regulations over the last four years, advocates urged the regulator not to leave its scrutiny at simply sneaky rate hikes and fees but to delve deeper into legal disclosures.
- Bank Credit-Card Fees Face New Scrutiny by U.S. Consumer Bureau
Bloomberg 02 Oct 2013
The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 limited lenders' ability to hike interest rates, curtailed late fees, and forced lenders to obtain customers' consent to apply over-limit fees. The law produced $4 billion in savings to U.S. consumers last year through these impacts, according to the Consumer Financial Protection Bureau (CFPB), which calculated that the total cost of credit on the cards is down by two percentage points.
- OCC Warns of Credit Card Scam
American Banker 27 Sep 2013
A fake Florida bank has been using a fraudulent credit card scheme to cheat U.S. consumers, the Office of the Comptroller of the Currency (OCC) is cautioning. The bogus AmTrade International Bank sends consumers mail offers for semi-secured credit cards, instructing them to send checks in amounts ranging from $500 to $900 in order to obtain the card. Marketed as a strategy for rebuilding damaged credit, the card never arrives after the consumer's check gets cashed.
- Chase Scraps Joint Credit Cards
CNN Money 24 Sep 2013
In a move likely to be copied by other banks, Chase has announced it will no longer allow customers to open joint credit cards -- a popular option for couples sharing the responsibility of repayment.
- JPMorgan Fined $389 Million for Deceptive Credit Card Practices
Washington Post 20 Sep 2013
The Office of the Comptroller of the Currency (OCC) on Thursday hit JPMorgan Chase with $389 million in penalties for duping millions of customers into buying expensive and unnecessary services when they signed up for credit cards.